“The court forcefully affirmed San Francisco’s interest in protecting public health, and repeatedly emphasized the likelihood that the sugary soda lobby’s case would fall flat,” City Attorney Dennis Herrera said.

Herrera cracks down on affordable housing fraudster

City Attorney continues push to stop affordable housing cheats and ensure homes go to those who need them

“The court forcefully affirmed San Francisco’s interest in protecting public health, and repeatedly emphasized the likelihood that the sugary soda lobby’s case would fall flat,” City Attorney Dennis Herrera said.

SAN FRANCISCO (Aug. 23, 2017) — City Attorney Dennis Herrera today filed a lawsuit against a San Francisco man for defrauding the city’s affordable housing program, the latest step in Herrera’s broader efforts to combat the affordable housing crisis in the city.

The lawsuit filed this morning in San Francisco Superior Court against defendant Gregory Garver, a licensed real estate agent, alleges that he deliberately violated the requirement that his below market rate condominium in the SOMA Grand building be owner-occupied.  Instead, Garver rented out to tenants for years, and later tried to sell the unit on the open market, breaking key rules of a program aimed at keeping low- and moderate-income households in the city.

The misuse of the property was an unlawful, unfair and fraudulent business practice; violated the city’s Planning Code; and created a public nuisance, the lawsuit says.

“As many people are all too aware of, San Francisco’s supply of affordable housing is needed now more than ever,” said Herrera. “Designated affordable units like this one are a key part of the city’s efforts to keep long-time residents and working class people in San Francisco. These units are designed to provide hardworking city residents with homes they own. They are not investment properties for aspiring landlords. Those who game the system are taking away housing from people who desperately need it. We will not tolerate that.”

“These units are an important public resource,” said Mayor’s Office of Housing and Community Development Acting Director Kate Hartley.  “We are committed to making sure they’re used for their intended purpose: providing stable, long-term homes for low- and middle-income households.  We appreciate the City Attorney’s help in achieving that.”

The lawsuit is the third that Herrera has brought since May against people defrauding the below market rate, or BMR, program. It comes as Herrera continues to battle to ensure that the housing market remains as fair as possible, successfully taking on both home ‘sharing’ companies that were fighting common-sense regulations and ruthless landlords who were flouting laws protecting low-income, elderly, disabled and rent-controlled tenants.

San Francisco’s Inclusionary Affordable Housing Program is a major aspect of the city’s housing strategy. It requires developers to set aside a certain number of units to be sold to low- or middle-income households at below market rates in an effort to retain residents of all incomes in the city. Qualified low- and moderate-income, first-time homebuyers who wish to purchase a below market rate unit enter their names in a lottery. The lucky few whose names are chosen purchase the property for a below market price. In return, the households agree to abide by restrictions and conditions placed on the unit to ensure that the housing remains affordable and serves those most in need. For example, the purchasers must be a first-time homebuyer, occupy the property as their primary residence, and not rent it out without city approval. If a purchaser wants to move, the city facilitates the sale to another qualified buyer.   

According to the complaint, Garver purchased the below market rate condominium in the SOMA Grand building located at 1160 Mission St. in 2008. As part of the purchase, he signed an “Acknowledgment of Special Use Restriction and Residence Element.” This included abiding by BMR program rules, like the clear rule that “BMR units are to be owner-occupied and never used as investment or rental property.” Garver also signed an affidavit affirming that he would occupy the property as a principal place of residence and that he would not rent out the unit, in whole or in part.

However, by 2012 Garver moved out of the property and began renting it to tenants. From November 2012 until July 2016 he rented it to the same tenant for $2,400 per month, until he raised the rent to $18,000 per month. The tenant moved out due to the rent increase, and Garver moved back into the property in August 2016.  Shortly thereafter, the building’s homeowner’s association began receiving complaints from other residents about Garver and his three large dogs. After 184 complaints, the SOMA Grand HOA finally sued Garver. According the December 2016 lawsuit, Garver’s dogs would lunge at other residents, and on at least two occasions, video footage captured Garver training the dogs in the hallway of the building to attack and bite an associate. Residents also complained about loud barking late into the night and a foul odor emanating from Garver’s unit, described as “somewhere between dead bodies and rotten liver.” In June 2017 the court entered judgment in favor of the HOA and against Garver.

Meanwhile, ever since December 2016 Garver has repeatedly offered his unit for rent in online classified ads on Facebook, Craigslist, Trulia and Hotpads, including a July 2017 Craigslist ad “looking for an attorney to move in.”  He also unlawfully listed the condominium for sale.  Even in June 2017, Garver was collecting rent for his unit.

The City Attorney is seeking a court order requiring that Garver comply with the law, including by selling the property to a qualified low-income household. The lawsuit also seeks penalties of up to $2,500 for each unlawful, unfair, or fraudulent act by the defendant, as well as penalties of at least $200 per day for violations of the Planning Code. Combined, those penalties could total hundreds of thousands of dollars. The suit also seeks attorney’s fees as well as enforcement costs.

Along with the lawsuit, the city is serving a notice of default on the defendant, which is the first step in collecting on a promissory note to the city that Garver — like other below market rate buyers —  signed to guarantee his pledge to follow the rules of the program. The promissory note is secured by a deed of trust on the BMR unit.

The case is: City and County of San Francisco, et al. v. Gregory Garver, San Francisco Superior Court, CGC-17-560891, filed Aug. 23, 2017. Additional documentation from the case is available on the City Attorney’s website at: https://www.sfcityattorney.org/.

To make a complaint about potential violations of San Francisco’s Planning Code or other municipal codes, including potential abuses of San Francisco’s Inclusionary Affordable Housing Program and BMR units, call the City Attorney’s Code Enforcement Hotline: 415-554-3977. 

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